Tuesday January 21st, 2020

Chinese CNY weakened almost 1% vs US$ on growing travel/tourism concerns linked to the spread of the pneumonia-like virus in China. Growing concerns over the virus caused AUD & NZD to weaken alongside the CNY and caused JPY to rally. The US$ is steady vs the major currencies, remaining near its one month high. With no key US data out today the markets will watch for comments from Davos & the US impeachment trial for direction.

Oil prices fell 1% on confidence that OPEC+ can increase supply to offset the Libyan oil disruption. C$ remains steady within its current tight trading range. Wednesday will see a number key Canadian data releases as well as BOC monetary policy report. Expect C$ to remain within its current trading band ahead of tomorrow’s data. Market expectations are that the BOC will leave its benchmark interest rate on hold at 1.75%.

Euro rebounded from its lows yesterday as it continued to hold above the key 1.1065 vs US$. French President Macron tweeted yesterday that US & France will « work together on a good agreement to avoid tariff escalation ». US & France have agreed to a one year truce on tariffs. The positive trade headline helped Euro bounce back to the 1.1100 level.

GBP rebounded from yesterday’s lows after UK wage data beat expectations, helping sterling retest 1.3050 vs USD. Month end concerns remain with both BOE rate decisions and the UK’s exit from the EU, but intraday investors feel GBP may have bottomed out.